Learn more about the housing market in Virginia

Every state is unique when it comes to the real estate market. That’s why it’s critical to understand the market you live or operate in. Whether you’re renting, buying, or selling, it will impact many aspects of your life.   

In this article, we’ll cover the Virginia housing market, including key trends and metrics you need to know as a homeowner or investor in the state. For more information about Virginia’s housing market, an additional resource is Virginia REALTORS, who provide insights and analysis on the market and also highlight the impact of rising interest rates, home prices, and inventory on home sales. 

Virginia Housing Market Overview  

Virginia is a state in the Southeastern portion of United States between the Atlantic Coast and the Appalachian Mountains. Some of the largest cities in Virginia include Virginia Beach, Chesapeake, and Arlington. 

According to data from IBISWorld, Virginia was 24th (out of the 50 states) in GDP growth rate over 5 years leading up to 2022. Virginia housing market predictions reflect this economic uncertainty through low inventory and rising home prices that continue to shape the market. 

At the beginning of 2024, real estate experts predicted that Virginia housing prices that had risen all throughout 2023 would continue to rise as the supply and demand disparity continues to be an issue (particularly in the Northern Virginia housing market). In 2023, there was a sharp increase in supply that contributed to more competitive prices. As of May 2024, this continues to be the case. Virginia housing trends show brisk sales and rising prices, particularly near larger cities and metro areas. Even though this signifies an imbalance created by steadily rising demand with supply that isn’t keeping pace, experts believed the brisk sales would slow a bit as new construction increases. 

Currently, Virginia is still very much a sellers’ market. Demand far outweighs supply and that looks to be continuing for the foreseeable future. We’ll get into more of the specific data below. 

Virginia Housing Market Trends  

To understand the Virginia real estate market, it’s important to keep up with trends such as the average price and rate of rising property prices in Virginia. On the whole, rising interest rates are making it more difficult for first-time home buyers to purchase a home, affecting the behavior of existing homeowners, and causing seller hesitation in setting prices. Let’s look in more detail at some of the key real estate trends in Virginia: 

Note: These statistics are based on Redfin’s monthly housing data from May 2024. 

Median Home Price 

The median price of a home in Virginia as of May 2024 was $463,600, according to Redfin’s monthly housing market data. This is an increase of 4.8% from May 2023. In Virginia Beach, Virginia’s most populous city, the median price in May 2024 was lower at $399,000, which was still an increase of 7.8% from the previous year. Richmond, the capitol city, had median prices closer to the statewide median at $424,995, an extreme 19.3% increase from May 2023.   

The list price plays a significant role in competitive market dynamics and seller dominance, with many homes being sold above or below the list price depending on the market conditions.  

Number of Homes Sold in May 2024  

11,300 homes were sold in Virginia in May 2024, which is a 2.4% increase from the previous year. Virginia sold statistics show a decline in home sales across the state, attributing it to factors such as rising interest rates and increasing home prices. Though this suggests an increase in inventory throughout the year, the supply still isn’t keeping pace with demand. 

It’s also important to keep in mind that nationally speaking, sales usually peak during the spring and summer months and slow in the winter. In fact, the National Association of Realtors (NAR) predicts that in February and March alone, sales activity increases by as much as 34% and prices by 3%. 

Median Days on Market (DOM)  

Days on market (DOM) is a measure of the average length of time a home remains listed on the market before being put under contract. A lower DOM signals a highly competitive seller’s market with more pressure on buyers to make higher offers and remove contingencies. A higher DOM signals a buyer’s market as sales are slower and sellers have less leverage.   

The median DOM in Virginia in April 2024 was 20 days, which up 1 from May 2023. The average DOM in the United States is 32, so houses in Virginia go quickly.  

New Supply Statistics  

In May 2024, Virgnia had 2 months of supply, which is below the 4-5 months experts typically say is healthier for a housing market. Thus, this statistic also means Virginia leans to sellers more than buyers.  

Property Tax Rate  

According to Rocket Mortgage, the average property tax rate in Virginia is 0.87%. This is right around the middle of the pack compared to the rest of the states. However, it is important to keep in mind that this statistic reflects the average of a lot of data in a populous state with significant geographic and economic diversity. Tax rates are likely to vary depending on the value of a home and its location in the state.   

Foreclosure Rate in Q1 of 2024  

In the first quarter of 2024, 1 in every 2,578 homes in Virginia experienced a foreclosure filing, according to recent data from ATTOM. This isn’t extremely high or extremely low, representing a foreclosure rate that’s about average compared to the rest of the U.S.

Hottest Local Markets in Virginia  

Here are a couple of the top local housing markets in Virginia for 2024, where the median sale price provides a benchmark for understanding the overall price trends within the housing market: 

1. Virginia Beach

Virginia Beach is the most populous city in Virginia by a significant margin. This resort area is at the mouth of the Chesapeake Bay. In May of this year, there were 602 homes sold, which is a 4.7% increase from last year. With a DOM of 18 days, this area is also a sellers’ market. 

2. Norfolk

This waterfront city in the southeast part of Virginia is home to a large naval base. It’s also home to a very competitive housing market, which has seen a 4% increase in median sale price and almost a 2% increase in homes sold over the past year (May 2023 to May 2024). Homes with price drops are increasing, though, which reflects the larger market trends. 

The Richmond Metro Area is witnessing significant drops in sales activity alongside other regions like Lynchburg and Northern Virginia. 

Economic Factors Impacting the Virginia Housing Market  

A holistic view of Virginia’s housing market requires a basic understanding of the main economic drivers affecting the market. Let’s take a look at a few critical ones below: 

Rising Interest Rates 

Mortgage rates are a common cause of concern for would-be homeowners across the U.S. in 2024. As previously mentioned, Bankrate lists Virginia’s current 30-year fixed-rate mortgage averages 6.96%, which hovers just over the national average. As predicted, this number has settled when compared to the numbers seen towards the end of 2023. Yet, existing homeowners in Virginia are still staying in their homes longer due to the interest rate environment and the limited housing supply. 

Inflation and Cost of Living 

Mortgage rates are tied to inflation, another massive contributing factor to the affordability of housing and the state of housing markets in general. Inflation has increased the cost of living for many across the U.S., including in Virginia. This means fewer people can truly afford to limit housing costs to less than 30% of their monthly income.   

Population Changes and Demographics 

A changing population can also have implications for the housing market. According to the U.S. Bureau of Labor Statistics, the unemployment rate in Virginia, 2.7%, which is well below the national average. This low unemployment rate suggests a healthy economy that is bound to help the housing market in the state.   

Virginia Housing Market Forecast 2024  

As previously mentioned, multiple sources considered the appreciating housing market Virginia faced in 2023 and predicted that prices would continue to rise per the housing market predictions 2024 Virginia. This has proven true over the year, although steadying interest rates and a hope for increased supply in the housing market signified by an increase in sales may indicate a slowing growth in prices. 

However, it’s also important to monitor home prices dropping, as this can have significant implications for buyers, sellers, and the overall housing market. Sustained drops in home prices may indicate broader market challenges and affect affordability for buyers. 

Likelihood of Virginia Housing Market Crash  

Experts believe a housing market crash is highly unlikely. Virginia is one of the fastest-growing states in the nation and it has a healthy economy. The friendly tax policies are also helpful for people moving in. The average cost of living is below the average median household income, too.  

So, although Virginia has some issues as we’ve outlined earlier, it doesn’t seem to be in danger of a housing market crash anytime soon.  

Forecast for the U.S. Housing Market  

Now that we’ve looked at Virginia’s housing market, let’s zoom out a little bit. What about the U.S. housing market? What do you need to keep an eye on in the coming years? 

The United States’ current median existing-home sale price is around $384,500 per the National Association of Realtors. The inventory, though, remains low. A balanced market typically has a 5-to-6-month supply, but the current figure is 2.9. 

We’re currently in a seller’s market with buyers looking at continued rising house prices. Sellers have the upper hand in negotiations due to rising prices, limited inventory, and strong demand. The same trend can be seen with renters. Housing continues to appreciate, in general. 

Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research, National Association of Realtors, believes the housing market will appreciate 15 to 25% over the next five years. He thinks that the seller’s market will continue because housing inventory will remain low. In five years, however, he predicts a more balanced market, in which neither party has a built-in advantage. Thus, the market will shift to a case-by-case basis to determine what kinds of deals people can get. 

Hybrid work also impacts the housing market. This shift in work culture means suburbia will continue to grow. States like Texas, the Carolinas, Tennessee, and Florida should see continual growth. 

The number of single-family homes built decreased over the past couple years while the number of multi-family homes increased due to lower prices and a demand for affordable housing. Higher mortgage rates and inflation (affecting price of materials) were the main causes. 

Lower income households continue to struggle in the current housing market. This trend appears likely to continue into the foreseeable future. Without enhanced supply or helpful subsidies, the outlook is that many Americans will still wrestle with housing affordability in the years to come. 

Virginia Rental Market  

The rental and buying market are obviously closely linked. When home prices fall, landlords are more likely to buy properties to rent out. Home prices and rental prices are correlated as well because a hot market means prices rise.   

Rents were more unaffordable than ever in 2021 and 2022. In 2022, 22.4 million households paying rent said it was unaffordable, which is the highest that figure has ever been, according to a January report from the Joint Center for Housing Studies at Harvard University. The study found that half of all renters in the United States spent over 30% of their income on rent and utilities.   

The markets cooled in 2023, though, due to new units and decelerating demand. But a serious problem persists: Rent increases are still outpacing income gains.   

Moreover, high interest rates are keeping borrowing and transaction activity down. Over half the banks surveyed by the Federal Reserve reported that demand for multifamily loans decreased year-over-year.   

The pandemic caused a housing disparity that isn’t going away anytime soon. Unaffordable housing is a serious issue across America. Whether high rents or low income is the main cause doesn’t change the fact that this problem is widespread.  

This short summary leads directly into Virginia’s current rental market. Below are just a few of the current trends for Virginia’s rental market based on data pulled from Zillow:

Virginia Rental Market Key Trends 

• Median rent: $2,095  

• Month-over-month rent change: +$95  

• Year-over-year rent change: +$95  

• Available rentals: 8,893  

Conclusion  

Virginia’s housing market continues to see growth opportunities and challenges.  But the state’s market seems poised to stabilize while continuing as a sellers’ market. Experts and analysts will continue to monitor this market, as well as nationwide factors like interest rates and new construction.